Correlation Between PayPal Holdings and Agile Group

Can any of the company-specific risk be diversified away by investing in both PayPal Holdings and Agile Group at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining PayPal Holdings and Agile Group into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between PayPal Holdings and Agile Group Holdings, you can compare the effects of market volatilities on PayPal Holdings and Agile Group and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in PayPal Holdings with a short position of Agile Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of PayPal Holdings and Agile Group.

Diversification Opportunities for PayPal Holdings and Agile Group

0.83

Correlation Coefficient

PayPal Holdings  Agile Group

Very poor diversification

The 3 months correlation between PayPal and Agile is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding PayPal Holdings and Agile Group Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agile Group Holdings and PayPal Holdings is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on PayPal Holdings are associated (or correlated) with Agile Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Agile Group Holdings has no effect on the direction of PayPal Holdings i.e., PayPal Holdings and Agile Group go up and down completely randomly.

Pair Corralation between PayPal Holdings and Agile Group

Given the investment horizon of 90 days PayPal Holdings is expected to generate 0.57 times more return on investment than Agile Group. However, PayPal Holdings is 1.74 times less risky than Agile Group. It trades about -0.13 of its potential returns per unit of risk. Agile Group Holdings is currently generating about -0.1 per unit of risk. If you would invest  8,543  in PayPal Holdings on December 28, 2024 and sell it today you would lose (1,657) from holding PayPal Holdings or give up 19.4% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

PayPal Holdings  vs.  Agile Group Holdings

PayPal Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days PayPal Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Agile Group Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Agile Group Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with PayPal Holdings and Agile Group

The main advantage of trading using opposite PayPal Holdings and Agile Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PayPal Holdings position performs unexpectedly, Agile Group can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Agile Group will offset losses from the drop in Agile Group's long position.

The idea behind PayPal Holdings and Agile Group Holdings pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.